HRB Motorcycles plans to launch a new bike model and for that purpose the company will issue
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Question:
HRB Motorcycles plans to launch a new bike model and for that purpose the company will issue bonds to finance the project. Hartman Brothers Inc., a prestigious investment bank, is the advisor and underwriter of HBR in that financial operation. Hartman’s analysts suggest a bond issuance whose entire nominal will be €124,0 M (million) and a 6.2% annual coupon. Hartman will charge HRB with a 1.4% on the operation, only for the first year.
- What will the actual cost of the debt issuance be for the first year?
- If HRB must pay 40% taxes on income, compute the after-tax cost of the debt issuance (bank fees included).
Related Book For
Public Relations Strategies and Tactics
ISBN: 978-0134003689
11th edition
Authors: Dennis L. Wilcox, Glen T. Cameron
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